Interest rates on mortgages drop after a week-long rise.

Interest rates on mortgages drop after a week-long rise.

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In a dramatic turnaround, 30-year mortgage rates took a nose dive today, dropping from 7.07% to 7.04%. Other mortgage types also witnessed a decrease.

To secure the best mortgage rate, it's essential to shop around and compare rates regularly, regardless of the mortgage type you're eyeing.

Compare Current Mortgage Rates Today - May 16, 2025

Today's new purchase mortgage rates experienced a 3-basis-point dip, putting a halt to a 5-day climb that elevated the average by 16 basis points. At 7.04%, the current average is slightly better than the mid-April high of 7.14%, the highest reading since May 2024.

In stark contrast, rates on 30-year mortgages plunged to a 2-year low of 5.89% last September, a full percentage point cheaper than today's rates. However, even today's average is a significant improvement compared to late 2023 when rates skyrocketed to an 8.01% historic peak.

The 15-year mortgage rates also tumbled after a weekly increase, shedding 5 basis points today to settle at 6.09%. This is cheaper than the April 11 reading of 6.31%, the highest 15-year average in nearly a year. Comparatively, it's about a percentage point below October 2023's historic 7.08% peak, a 23-year high. However, back in September, rates dropped to a 4.97% two-year low.

Jumbo 30-year mortgages remained stable today, with the current average of 7.04% representing an enhancement compared to the 7.15% reading four weeks ago, which was a 10-month high. Last fall, jumbo 30-year rates sank to 6.24%, the cheapest level in 19 months, while it's estimated their 8.14% peak in October 2023 was the most expensive jumbo 30-year average in over 20 years.

Every week, Freddie Mac, a government-sponsored mortgage loan buyer, releases a weekly average of 30-year mortgage rates. This week's reading added 5 basis points, reaching 6.81%. Last September, the average plummeted to 6.08%, but in October 2023, it surged to a 23-year high of 7.79%.

Freddie Mac's weekly average differs from our reporting for 30-year rates because Freddie Mac calculates a weekly average over five previous days of rates. In contrast, our Investopedia 30-year average offers a daily reading, providing a more precise and immediate indicator of rate movement. In addition, the criteria for included loans (e.g., down payment amount, credit score, discount points inclusion) vary between Freddie Mac’s methodology and our own.

Calculate monthly payments for different loan scenarios with our Mortgage Calculator.

Important

The rates we provide won't compare directly with advertised rates since these rates are handpicked to showcase the most attractive figures. Advertised rates may involve paying points upfront or may cater to borrowers with exceptional credit scores or smaller-than-typical loans. Your ultimate rate will be contingent on factors such as your credit score, income, and more, so it may diverge from the averages provided here.

Your monthly mortgage payment will hinge upon factors such as your home price, down payment, loan term, property taxes, homeowners insurance, and loan interest rate (strongly influenced by your credit score). Utilize the inputs below to estimate your potential monthly mortgage payment.

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What Causes Mortgage Rates to increase or decrease?

Mortgage rates fluctuate due to a complex mix of economic, financial, and personal factors. Analyzing these factors provides insights into how mortgage rates respond to changes and how they affect different types of mortgages.

Factors Influencing Mortgage Rates

1. Economic Trends and Inflation:
2. Economic Expansion: Strong economic growth fuels increased housing demand, potentially increasing mortgage rates[3][4].
3. Inflation: Inflation often triggers higher mortgage rates as lenders account for the erosion in purchasing power[3][4].
4. Federal Reserve Policy:
5. The Federal Reserve's monetary policy, such as adjustments to the federal funds rate, significantly impacts mortgage rates by affecting lending costs for banks[2][3][4].
6. Supply and Demand:
7. Intense demand for mortgages can lead to higher rates when lenders have limited capital to loan[3].
8. A dearth of demand may result in lower rates to entice borrowers[3].
9. Bond Market Activity:
10. Mortgage rates are intimately tied to bond yields, particularly the 10-year Treasury bond. When bond yields rise, mortgage rates often follow suit[1][3].
11. Personal Factors:
12. Credit Rating: A higher credit rating may result in better mortgage rates for individuals[2][5].
13. Debt-to-Income Ratio and Down Payment: Lower debt-to-income ratios and larger down payments can also lead to more favorable rates[2].
14. Lender Discrepancies:
15. Mortgage rates can vary significantly between lenders, including differences between banks and credit unions. Credit unions often offer more competitive rates due to their member-owned structure and financial stability[5].

Impact on Different Mortgage Types

• Fixed-Rate Mortgages: These are influenced by long-term economic trends and bond market conditions. They remain unaffected by short-term rate changes once the loan is established[1][3].
• Adjustable-Rate Mortgages (ARMs): ARMs are more sensitive to economic fluctuations and Federal Reserve policy. Initially, they often start with lower rates than fixed-rate mortgages but can escalate over time based on market conditions[2].
• FHA Mortgages: These generally offer lower rates than conventional mortgages but may include additional costs such as mortgage insurance premiums[2].
• Conventional Mortgages: Rates for these mortgages are generally higher than FHA rates, butThey may vary based on the borrower's creditworthiness and loan conditions[2].

1. In today's personal-finance landscape, understanding the factors impacting mortgage rates is crucial for smart ico in investing.
2. For example, smart investors might consider delaying their ico loan applications during periods of economic expansion, when mortgage rates are expected to rise due to increased demand for mortgages and strong economic growth.
3. Additionally, rather than purchasing personal-finance tokens blindly, some investors may prefer stablecoins backed by returns from trading mortgage-backed securities (MBS) that mirror the changes in 30-year mortgage rates.

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